💢 Saudi Arabia and the UAE are testing the limits of the Gulf’s oil-funded economic model.

💢 Saudi Arabia and the UAE are testing the limits of the Gulf’s oil-funded economic model. Saudi Arabia’s 2026 budget projects a 165 billion-riyal deficit, while Kuwait has budgeted a 9.8 billion-dinar shortfall — roughly a fifth of GDP. The IMF projects Bahrain’s government debt at nearly 150% of GDP in 2026 and Qatar’s economy to contract by 8.6%.

Foreigners still account for more than 75% of Saudi Arabia’s private-sector workforce, while the Public Investment Fund has shifted toward more selective capital allocation and higher returns. Dubai remains heavily dependent on external flows: DXB handled a record 95.2 million passengers in 2025, but traffic plunged 65.7% year-on-year in March after the regional war disrupted aviation.

Kuwait spends 76% of its budget on wages and subsidies, while Bahrain’s government revenue amounts to about 18% of GDP against spending of roughly 29%. Qatar has also imposed precautionary cuts to some operating expenditure following disruptions to its gas sector. The Gulf’s vast sovereign assets remain a powerful buffer, but increasingly they are being used to preserve fiscal and economic stability rather than simply finance expansion.

Subscribe @NewResistance